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Regular Contributor
Posts: 105
Registered: ‎04-15-2008
0

Does a high credit card limit ever hurt?

I have 5 credit cards with a total CL of just over $75k.  I owe $3400 on one card, down from $6400 at the beginning of this year, and I use the others occasionally for very small purchases ($18 on one, $12 on another this month) and pay in full.  I may be wrong but I thought I read somewhere that lenders can look at the amount of POTENTIAL debt as a negative.
 
Even though I have very low utilization, My Fico says that something that is hurting me is high credit balances!  Can't win it seems.
 
I have had two mortgages, two different house, in 8 years - never late, and an auto loan with one year left - never late.
 
1/10/09 EQ=806, TU=772, EX=788
Valued Contributor
Posts: 1,291
Registered: ‎02-26-2008
0

Re: Does a high credit card limit ever hurt?

The 3400 on one card is probably what MyFICO is fussing about, if that is more than 10% (or maybe even 5% if it has nothing else to complain about) of the limit of the card.
Valued Contributor
Posts: 1,185
Registered: ‎03-04-2008
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Re: Does a high credit card limit ever hurt?

High available credit may have an impact when applying for new credit, particulary mortgages. Be very careful when following the advice of any mortgage agent in this, or any other, regard with respect to your credit. Their advice can be very faulty. For instance they might suggest that you close an account which could have a very negative effect on your FICO score and should not be necessary. Practice good credit hygine at all times and you should not have problems.
Moderator Emeritus
Posts: 6,794
Registered: ‎09-29-2007
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Re: Does a high credit card limit ever hurt?



jmbfl wrote:
High available credit may have an impact when applying for new credit, particulary mortgages. Be very careful when following the advice of any mortgage agent in this, or any other, regard with respect to your credit. Their advice can be very faulty. For instance they might suggest that you close an account which could have a very negative effect on your FICO score and should not be necessary. Practice good credit hygine at all times and you should not have problems.



Well said!  Agree 100%.
 
----------------------------
App free since 7/11/08.
TU 744 / EX 710 / EQ 694 (Starting to slip. :smileysurprised: )
Established Contributor
Posts: 739
Registered: ‎06-30-2007
0

Re: Does a high credit card limit ever hurt?

Only when you get a loan officer  that sees available credit as debt. it's like they're thinking that they are the final account your waiting for before you go out and max out all your accounts
People say "Only apply for credit you NEED"

I say "apply for credit you have PRATICAL use of"

I don't have AMEX card because I don't want a card that suffers from PMS
Regular Contributor
Posts: 105
Registered: ‎04-15-2008
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Re: Does a high credit card limit ever hurt?

Funny that I just opened a letter from WaMu that they did a CLI from $9000 to $9500 (which is a little lame in my opinion). I'm more informed now about credit and with my scores in the mid-700's if a lender told me to close accounts I'd walk away and go to one that wanted my business.
 
My CL hasn't changed significantly in the last 4 years since I bought my last house, a little here and there I guess.  It irks me every time I think of it...  I refinanced my previous house twice to lower interest rates and I was told that I was a "prime loan".  When I bought this house Wells Fargo required me to pay off all my credit card debt.  I don't remember how much it was but it wasn't significant, a few thousand I think.  I think they did it because they knew that I COULD pay it all off AND I was putting $70k down (20%).  What irks me is overhearing people in the builder's office being told about 100%, 105% financing, no down, etc. etc. etc., and now there are 3 houses in a row across the street from me that are bank forclosures. 
 
Banks created this housing crisis and people who are responsible are paying for it.  If I knew then what I know now I'd have told them where they could put that requirement and go elsewhere.  I have a 30-year fixed at 6.25%.
 
On the Suze Orman show recently she said to get out of credit card debt at all costs even if you have good credit.  The banks need to make money and they're going after the people that they CAN make money off of.  They are raising interest rates on good history as well.  I think I read here a post from someone on an article where someone had their rate raised outrageously in tiny print on a statement for no cause.
 
I know they can raise the interest rate if you're late and about 6 months ago I had made two payments totalling $1500 on a card I was working to pay off.  I had thought that the billing cycle end date was the 14th and I made one of the payments on the 15th with all my other bills as usual.  Well, the cycle ended the 16th so the next month, when I thought I had already made the payment for that month, they raised my rate to 10.99% because of a late payment.  I immediately transfered the balance to another card at 2.99%. 
 
In contrast when I moved about 7 years ago I got out of whack on payments when I hadn't received a bill on one card.  I immediately called them when I got the bill with a late payment fee and did a payment over the phone.  To my surprise the next month they had reversed the late payment charge because of my good history.
 
Neither of those ever showed up on my credit as a late.
1/10/09 EQ=806, TU=772, EX=788
Senior Contributor
Posts: 3,279
Registered: ‎08-03-2007
0

Re: Does a high credit card limit ever hurt?

I'm about to find this out myself. I have opened a lot of credit in the past couple of months, but I haven't really used any of it.

I am looking to refi out of my ARM here soon, and am working with both Wells Fargo and Navy Federal as far as refinancing.

So far, both have said something about an unpaid collection, and neither have said anything about available credit, so I'm hoping it not to become an issue.
Here we go again...
Established Contributor
Posts: 656
Registered: ‎07-17-2007
0

Re: Does a high credit card limit ever hurt?

If a mortgage lender tells you that your high credit limits (limits, not balances) are a problem, asking a CCC for a credit limit decrease is a possibility. Although personally I'd just go to another lender who doesn't have their head up their ***.
Frequent Contributor
Posts: 386
Registered: ‎03-27-2008
0

Re: Does a high credit card limit ever hurt?

I agree indeed Sir If a person has built up his/her credit to a point where he/she has fairly large CL  and they have no problem meeting thier current obligations I see that as a plus also that is an accomplishment to be proud of. I would consider it a insult if that was the case for me and a lender asked me to decrease or close out some of my higher CL accounts. I would seek a lender that is more knowledgable pertaining to this issues. No one should ever close accounts that are in good standing as this will have adverse effect on your FICO score.You will have to stick to your Guns on this one.
Epic Contributor
Posts: 24,351
Registered: ‎10-23-2007
0

Re: Does a high credit card limit ever hurt?

[ Edited ]
I have had my interest rate go up on some of my business cards (not personal cards) after being a customer for over a year.  Banks are changing there criteria saying they are preparing for more defaults.
Advanta took my one business card from 8.9 - 17.9!! Never a late, never over limit, nothing bad on credit reports, they said it was an internal risk assessment change. - They also just gave me a CLI!
 
I think banks caused this crises in the first place, and they are making it worse than it needs to be by "preparing for more defaults" by increasing good customers rates and fees.


Message Edited by Creditaddict on 05-27-2008 01:42 PM
Fico Scores: EQ- 670., TU 705 Sync, EX 700 (04/20/15)
I'm just trying to catch up to RON1
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
83 Cards and Counting :smileytongue:
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